Question
Culver Tax Services provides primarily two lines of service: accounting compilation and tax return preparation. Accounting compilation services represent 60% of its revenue and provide
Culver Tax Services provides primarily two lines of service: accounting compilation and tax return preparation. Accounting compilation services represent 60% of its revenue and provide a contribution margin ratio of 30%. Tax return preparation services represent 40% of its revenue and provide a 40% contribution margin ratio. The companys fixed costs are $ 5,324,400.
(a)
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Your answer is correct.
Calculate the revenue from each type of service that the company must achieve to break even.
Revenue | |||
---|---|---|---|
Accounting | $ enter a dollar amount | ||
Tax | $ enter a dollar amount |
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(b)
The company has a desired net income of $ 1,972,000. What amount of revenue would Culver earn from tax return preparation services if it achieves this goal with the current sales mix?
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